Good afternoon, everyone, and welcome to our live full year 2021 webcast and conference call. As you can see with me today are our CEO, Timotheus Höttges, and our CFO, Christian Illek. Tim will first go through a few highlights, followed by Christian, who will talk through our financial numbers, and then Tim will take you through the operations in greater detail. After that, as always, we have time for the Q&A. Before we proceed, please pay attention as usual to the disclaimer which you find in the presentation. With that, I hand over to Tim.
Yeah. Thank you, Hannes, and welcome everybody. You could imagine that we are not very happy with our today's environment in which we are offering our great results of 2021, but you can't choose the days. We are totally shocked and appalled by the Russian attack on Ukraine and I would like to say that our thoughts are with the people who are suffering in this situation. I can tell you one thing, it shows us that business is not everything in life. Anyway, I think Deutsche Telekom is well positioned in this environment. We are in the Western world. We are not exposed to Ukraine, and nor we are exposed to Russia or the rest of the world.
Our business is very, well established in this Western environment. Therefore on the other side we are as well, maybe a little bit on more luckier side here, but let's talk about that later on in our discussions. We have changed the magnitude here or the order of our today's presentation. I will start briefly, but then Christian will go into the details of the financials, and then I will give you an update about the operational performance of our business. We will also add a few multiyear perspectives of today's Q4 and the full year review. Let me start with an overview chart.
You see that here it shows our progress against the strategic priorities we laid out at our last year's Capital Markets Day. One year into our new capital markets guidance, I think it's fair to say that we are very well on track. We overperformed in most of the KPIs for our stated financial and strategic targets. 2021 was a very strong year for us. Our commercial growth has continued strongly across the board, and we are very proud to announce 7.1 million postpaid customers in addition to what we had. 800,000 new broadband customers last year in our operations.
We over-delivered as well against our old cost saving target and we are well on track of our capital market commitments. We are on top of that driving our transformations towards our long-term ambition, the leading digital telco. Our 2022 guidance is for around EUR 36.5 billion adjusted EBITDA. For the first time, a double-digit free cashflow guidance. EUR 10 billion is the number which we lay out here. We will at least deliver on a EUR 1.25 earnings per share for this year, so another increase on this important KPI. On the capital allocation and portfolio side, we have also been very active in 2021. As you know, we secured a 5.2% stake increase in T-Mobile US.
We agreed to exit the Netherlands and the Romanian fixed line business. We are working on the strategic review of our towers, and we will talk about that more later. We made great progress towards unrivaled network leadership in all our markets. We made great progress both on 5G and on the fiber to the home build-out. Previously announced, we are proposing a dividend increase to EUR 0.64 in uncertain times. By the way, it is a payout ratio of a low 50%, so it shows you the substance and the solidity of our business, up from EUR 0.60 last year.
With all this, I hand it over to Christian, who will give you now the deep dive on the financial numbers because today is the review of 2021 and our numbers.
Thank you, Tim, and welcome from my side. Look, I got three main messages for you. First, 2021 was a good year financially. Second, it's within a series of good years, which we can see in the CMD review, which we're gonna provide later on. We will not stop with our growth trajectory also in the upcoming years, and you can see that in our guidance. Let me start with the usual table. Obviously, reported financials are impacted by the Sprint merger back in 2020. We have a lot of organic trends being provided in the backup. Our headline trends are also impacted by the deliberate and accelerated wind down of the handset lease business in the U.S. Let me have a look at the revenue number first.
Revenues on a reported basis were up 4.7% on a quarterly basis in Q4 and 7.7% on an annual basis. Organically, that translates into a 2.3% quarterly growth in Q4 and 4.5% last year. Let's move to EBITDA. Reported EBITDA was up by 0.6% in the Q4 , and the headwind from the handset lease business in the U.S. was approximately half a billion EUR in that given quarter. Organic EBITDA after leases without handset leases would have grown by 5% in that given quarter or 7.8% over the whole year. The reported ex-U.S. EBITDA was impacted by the sales of the Romanian fixed line business, where we only accounted revenues and EBITDA for nine months.
Organic growth in the ex-US business was 5% in the given quarter and 4.8% over the course of the full year. Let's move over to earnings per share. The Q4 EPS was down by 24% on a year-on-year basis, and that is very much driven by a EUR 0.06 impact of our valuation loss, both on the options and the forward. For the whole year, the EPS was EUR 1.22, which is actually pretty significantly higher relative to what we said at the Capital Markets Day, which was EUR 1.10. Noteworthy, I think we have in the adjusted EPS two, I would say, special impacts. One is the negative impact from the options and the forwards, which account for roughly EUR 0.04 over the course of the year.
We have some headwinds from the held for sale accounting from the Dutch business, which accounted for EUR 0.02. Moving on to free cash flow, net debt. Look, we invested EUR 18 billion in 2021, and we were still able to beat the free cash flow guidance of EUR 8 billion, which we have given at the beginning of the year. That comes with a small FX headwind, and it accounts and also includes a prepayment of T-Mobile US of $1 billion on leases to American Tower. The growth of free cash flow was very much driven by EBITDA growth. On net debt without leases, we were up year-on-year. That is all driven by T-Mobile US effects, and I will get into more detail later on.
Let's take a look at the financials on an organic basis. T-Mobile US grew by 0.1% in 2021. If you exclude the accelerated wind down of the handset lease business, they would have grown on the core EBITDA number of around 10% or exactly 10.1%. Germany grew at 3.7%. The European segment grew at 5.4%. Group Development grew by 13.5%. If you take the held for sale accounting tailwind out of the equation, it would have been still a 10% growth. T-Systems grew at 6.1%. Our combined ex-US EBITDA after leases on an organic basis grew almost at 5% in 2021. Germany has now delivered 21 consecutive quarters of EBITDA growth. This is more than five years.
In Europe, which is chasing Germany, and hopefully will never catch up, they basically have a consecutive growth of 16 quarters or full four years. For the whole group, we've seen an EBITDA growth of 1.9%, excluding the handset lease unwind, that would have been 7.8%. On service revenues, we were up 3.5% over the total year and 4.2% in the Q4 . The organic service revenue ex-US grew by 2%. Free cash flow was very much driven by operational free cash flow coming from the operations. That increase of EUR 2.5 billion was very much driven by the underlying strength of our commercial engine.
Despite the fact that we have leasing prepayments, which I talked about earlier, and also an increase of CapEx by EUR 1 billion coming from the U.S. On adjusted EPS, the net income grew at 3%. To be honest, that was very much impacted by the U.S. operations, which we talked about earlier on. On net debt and leverage ratios, let me dive into this a little bit deeper. What you can see without leases, net debt has grown by EUR 11 billion. There were actually net debt driving impacts coming from the U.S. One was obviously acquisition of additional spectrum, which in total accounted for EUR 8.3 billion, and C-band only was EUR 7.5 billion. The acquisition of Shentel, which is accounted for EUR 1.6 billion euros.
Secondly, there is a very strong impact which impacted the increase of net debt driven by the dollar. The dollar was at 1.23 at the beginning of 2021, but at the end of 2021, it was 1.13. That big impact was largely driven by the US dollar. Including leases, our leverage ratio is at roughly 3.1. Excluding leases, it's at 7.1. Very noteworthy to mention, we're totally committed to deliver the net debt target and the ratio target below 2.75 by the end of 2024, as we said it last year at the Capital Markets Day. That brings me actually to the Capital Markets Day review. Starting on page nine, you can see what we have delivered relative to our commitments.
I'm particularly happy that we have delivered our group free cash flow, which is EUR 8.8 versus the lagged 8 which we indicated, and also the adjusted EPS targets. Remember, these numbers were all prior to the merger. What we actually said is, we expect this to be dilutive, but still we over-delivered on the KPIs. On the dividend, we scored ourselves yellow because we have changed the policy in 2019, which you will recall. Therefore, overall, I would say a very, very good result. If we're moving to the next page 10, you can see that especially when it comes to service revenues, EBITDA, and free cash flow, you see a consistent performance over the course of 2017- 2021.
We are completely committed to our free cash flow target, which is supposed to be greater EUR 18 billion by the end of 2024. Let me get to the guidance. Oh, no, we have the indirect costs on the CMD target. Sorry, I missed that one. Our commitment was EUR 1.5 billion reduction, and we actually delivered EUR 1.8 billion. We're continuously focusing on indirect costs because direct cost is very much driven with revenue upsides, and you know that we're growing revenues, so therefore, our target is indirect cost. If you reflect on our achievements in 2021, we roughly delivered EUR 400 million cost reduction, and that is a third of the total target which we have given ourselves until 2024. Now to the guidance. How is the guidance being structured?
First, it reflects the midpoint of the T-Mobile guidance. Secondly, we have U.S. GAAP, IFRS adjustments which account for roughly 0.6 billion EUR, euros. Thirdly, we added the ex-U.S. guidance, obviously on a pro forma basis because we had to exclude Romania Fixed Line and T-Mobile Netherlands. As mentioned, the headline EBITDA's impact impacted by the accelerated wind down of the handset lease business in the U.S. As I said, the ex-U.S. business does not foresee any kind of contribution from the T-Mobile Netherlands business despite the fact that we haven't closed the deal yet. Our guidance is also based on the dollar exchange, which was last year's dollar exchange on average, which was a dollar and eighteen. If we basically adjust for the current spot rate, that number would look differently.
Let's start with the adjusted EBITDA after leases on the right-hand side. You can see that we're guiding $35 billion, of which $14.2 billion are coming from the ex-US business and $22.3 billion from the US business. On a like-for-like basis, if you exclude the Dutch business and you exclude the Romanian business, that is a $400 million increase on a pro forma basis. The $22.3 billion guidance on the US does include negative adjustment from U.S. GAAP into IFRS. Our guidance is completely in line with the consensus, if you adjust for currency and the Netherlands. We also have to bear in mind that the U.S. is actually accelerating the wind down of the handset lease business.
Their plan is to reduce the handset lease revenues on a dollar basis by $2.1 billion in this given year. That is a slight acceleration relative to 2021. If you exclude the leases out of the equation, and we're getting to the core EBITDA AL guidance, you see that we're around EUR 35.5 billion, and that would be a 5% increase. Moving to free cash flow. You see our group guidance is around EUR 10 billion. Again, that accounts for the midpoint of the U.S. guidance, plus a 3.7% free cash flow contribution from the U.S., and that is on a pro forma basis comparable to a delivery of $3.5 billion in 2021.
Again, what I said is that is an increase in free cash flow despite the fact, and we talked about this a year ago, that we're accelerating the fiber build-out here in our European business, especially in Germany. If you wanna have the details on our ex-US financials, I would refer you to page number 49. In the appendix, everything is being listed in there. Last but not least, the adjusted EPS. We guide a greater than 1.25 contribution. Obviously, we're not assuming anything happening on the options and the forwards. This is not being forecasted. Again, the full overview can be seen in the appendix. Of course, I wanna reconfirm that all the commitments we have given last year at the Capital Markets Day remain valid. That is actually the end of my financial review.
Now I hand it over to Tim.
Thank you, Christian. I start with our usual slide on the network infrastructure here. As you can see, we have now passed more than 10 million European homes with fiber to the home, of which one-third is Germany. In Germany, we added a record of 1.2 million homes last year. Outside of Germany, we added 1.4 million homes, which is also a record number. We cover over 90% with 5G and 29% of our European footprint outside of Germany. In the U.S., we cover 310 million POPs with 5G, of which 210 million POPs are coming with ultra capacity 5G services, which are speeds around 400 megabit per second.
We added more than 7 million customers on the mobile net add side in 2021. It's another record number. You can see how consistent our customer intake has been during the last five years. On top of that, we added more than 800,000 fixed broadband customers in Europe last year and more than 300,000 TV customers. Moving on to ESG, where we are always as well showing a few selected and important KPIs on page 16. Energy consumption and CO2 emission became part of our short-term incentive plan in 2021, not only for the board members, but for the whole leadership team here. We promised to reach 100% electricity from renewables, DT Group-wide from 2021 onwards, and we delivered. Our CO2 emission declined about 90% year-over-year.
Our energy consumption was slightly up compared to 2020, but please keep in mind that this is before the full benefit from the decommissioning of the Sprint network this year. It shows you the huge productivity increase which we have because data volume was increasing sharply as well. Our energy efficiency already improved by 15% in 2021. Going forward, this will improve further and we reiterate our target to keep overall energy consumption stable from 2020- 2024. We were able to improve our overall customer satisfaction in 2021 and to maintain employee satisfaction at the record level achieved in the year before. Of our many other initiatives, let me also highlight our support for last year's flood victims here in Germany, created as well big reputation for us.
T-Mobile's Project 10Million in the U.S., which has already connected 3.2 million students with free, subsidized services and our work against hate speech on the internet, well-recognized campaign, which we are running recently. Now let me deep dive into the operations starting with Germany. In Germany, our revenues grew by 1% this quarter. Organically, the growth was 2.1%. EBITDA grew by 3.6%, consistent with the strong growth shown all year. Total organic service revenues were up 2.1%, even better than the previous quarters. This was driven by growth both in B2C and in B2B. For the full year, organic total service revenue growth in B2B was 1.6%. Sorry, 2.6%.
This would have been 1.6% without just over EUR 90 million non-recurring public sector revenues that reflect to you throughout the year. Fixed service revenues growth also benefited from the ongoing strength of our broadband businesses, while roaming and wholesale remained a drag. Underlying mobile service revenue growth, adjusted for roaming and termination rate cuts, was around +2% as in the previous quarters. Our mobile contract intake remained solid, as you can see on the following pages. Our fixed line commercial remained strong as well. 84,000 broadband net adds. Again, almost no line losses anymore. TV net adds +34,000 and healthy retail fiber net adds of 204,000. Our wholesale fiber net adds remained a bit soft, largely due to the ongoing Vodafone migration. Moving on to page 22.
Our strong broadband customer growth, combined with ARPU growth, drove 6% broadband revenue growth. This is outstanding. Organic retail fixed revenue growth remained strong at 3.5%. Wholesale revenues improved to -3.3%. We expect another year-on-year decline in Q1 2022, but slight growth thereafter as last year's switch from the contingent model to the commitment model begins to roll over. Before we move to the other segments, we have a few more charts on Germany. On page 23, we show our progress with fiber. As promised, we doubled our deployment run rate to 1.2 million last year. We achieved this with an unchanged CapEx budget, but don't extrapolate this. We still expect our CapEx to be EUR 500 million higher by 2024 as we further accelerate the build-out.
In 2022, we target close to 5.5 million homes passed, and for 2024, we reiterate our beyond 10 million target. To this, you can add the incremental contribution from our new joint venture with IFM, which goes live this year. We are well on track to our capital markets targets to take unit deployment costs down 25% on a like-for-like basis. Inflation is not affecting us, we have long-term contracts. We are also making good progress with monetizing our investments. As you can see on the right-hand side, the share of contracts with at least a hundred megabits per second is now 1/3, up from a quarter last year. As a result, the broadband ARPU grew by 3 percentage points. We delivered 360,000 broadband net adds, and our broadband revenue growth was 6.1%. There's super big upselling potential.
Our more than EUR 300 million EBITDA growth in 2021 was driven equally by gross margin and indirect cost savings. A big driver of our performance is our customer service. We further increased our first contract sale resolution, a key KPI to drive customer satisfaction. Complaints were down by one quarter. Since 2017, they are down by three quarters. We dominated German customer service surveys again with fantastic results. We also progressed with our digitization. Some examples, we revamped our app, bringing our best-in-class platform from our segment Europe now into Germany. We've further shortened our IT time to market, and we shifted more calls to digital on track to our 40% Capital Markets Day target.
Our customer growth and our customer and employee satisfaction remained at record highs, achieved in 2021, but we won't stop here. Our final chart on Germany shows our service revenue and EBITDA performance from a multi-year perspective. You can see that we are well on track for our stated guidance of 2.5%-3.5% EBITDA CAGR through 2024. Another strong year of our German segment led by Srinivasan Gopalan. With that, let me move over a few slides on T-Mobile. T-Mobile had a strong result, too. U.S. GAAP service revenues grew by 5.5% year-on-year. Core EBITDA was up by 3.2%. Adjusted EBITDA declined by $0.3 billion, but that was after $600 million year-on-year decline in handset leasing revenues in Q4, and that is something which we actively driving.
We added 1.2 million postpaid accounts, a key metric. Our postpaid phone ARPU was up slightly year on year as we begin to monetize our market-leading 5G network. Total postpaid additions were 1.8 million. Phone nets were 840,000, bringing the full year to 2.9 million. As Mike Sievert said during the call, if Sprint customers had shown the same churn like Magenta branded customers, we would have closed with 1.4 million postpaid phone numbers higher. The good news is that we think that we saw the high watermark of Sprint churn last quarter as we accelerated the integration. We will decommission the Sprint network later this year. You see, the network integration is very well on track. Our final page on T-Mobile shows just how consistently T-Mobile has grown and why we won't stop.
T-Mobile remains very well positioned. It leads in the most important purchasing criteria, be it network, be it value for money or be it customer service. T-Mobile has a unique exposure to growth vectors, including small towns and rural, B2B and home internet. I was just in the U.S., and we saw impressive number on the way how we are growing in these areas. We have further upside on synergies, while merger-related drags are currently at a peak, but these are clearly finite and coming to an end. Let's go to Europe. Organic revenues grew by 3.6% in the Q4 , helped by a further roaming recovery. Organic EBITDA grew almost 7%, even better than the preceding quarters. This was driven by both net margin growth and further indirect cost savings.
Our commercial performance remained consistently strong too, as you can see on the following page. At last year's Capital Markets Day, our European segment laid claim to being Europe's fastest growing large European telco. Well, they almost missed it. Not because they did not grow fast, they delivered 5.4% growth, but because DT ex US in sum almost beat them with 4.8%. Good competition in sight. We are proud of our segment in Europe, led by Dominique Leroy. Organic EBITDA has now shown 16 quarters in a row growth, and we track well towards our capital markets guidance. We passed a record of 1.4 million homes with fiber last year to reach 7 million homes. On track for our 10 million target. We recently decided to further accelerate our fiber build in Greece.
By the way, I was on Monday in the Greek environment, and very impressed about the development I'm witnessing in this country, especially in the field of digitization. It was wise from us to early commit to a more build out there because we are now riding the wave of this development. We think the segment is best in class when it comes to convergence and digitization. Our app is a great platform for leveraging our Magenta Advantage. We have seen strong results in our early trials of our collaboration with SoftBank as well. Let's move on to Group Development led by Thorsten Langheim. Strong organic revenue and EBITDA growth continued, driven by both Netherlands and the tower business. The total contribution from held for sale accounting to our 2021 EBITDA was EUR 40 million. T-Mobile Netherlands continued to perform very well.
A clear highlight this quarter was our organic mobile service revenue growth of 6.4%. Moving on to the towers. In Germany, we added 1,100 sites in the last 12 months. This is the net result of 1,400 new builds and 300 decommissions. In the last four years, we built 6,300 new sites. This is far more than any other of our peers in Germany or elsewhere. Recurring rental revenues grew by 9.1%, boosted by 12.8% growth in external sales. Organic EBITDA grew by 5.9%. Organic EBITDA after leases grew by 7.9%. Another strong and peer-leading performance in this business. Finally, let me look at T-Systems, led by Adel Al-Saleh.
Organic revenue growth was slightly negative this quarter, but EBITDA growth was positive. The decline in the order book is driven by a tough competition. We expect growth in orders in 2022. We are seeing a recovery from the pandemic, but revenue trends remain impacted by an accelerated migration from legacy IT towards cloud-based services, where we are also seeing good growth. Headline trends are further impacted by the planned exit from low-margin activities such as end-user service and resale. Adjusted for this, 2021 organic revenues would have grown slightly year on year. The transformation is on a good way. Restructuring activities have been comprehensive. In effect, as you can see, it's almost EUR 400 million of net indirect cost savings in the last four years.
We reiterate our 2021 capital markets guidance for slight revenue growth during the guidance period and more than 5% EBITDA CAGR. Now that we have gone through the operating segment in detail, let me show you the group outlook for 2022 once more. EUR 36.5 billion adjusted EBITDA after leases. Around EUR 10 billion operating free cash flow and more than EUR 1.25 earnings per share. My final chart shows how our adjusted EPS has steadily increased and how we expect that to continue. Let me remind you once more of our capital markets guidance of more than EUR 1.75 adjusted earnings per share in 2024. We have maintained a solid dividend during our peak investment period. Our dividend is linked to our strong earnings growth through the 40%-60% payout ratio that we have committed.
Thank you for your attention, and now we are ready to take your questions.
Thank you very much, Tim. Now we can start with the Q&A part. If you'd like to ask a question, as always, press star one on your touchtone telephone. I will announce your name when it's your turn to ask a question. Should you require to cancel your question, please press the star two. With that, the first question we have is from Ulrich Rathe at Jefferies.
Thank you very much. I would like to focus on the fiber activity in Germany. It sounds very much like the altnets are really ramping, and there's certainly a lot of press and announcement and news flow around that. Now obviously that implies infrastructure share loss. Would you say this is still at the level of, let's call it uncomfortable pinpricks, or is there a reason for you to accelerate fiber plans simply to avoid giving up too much market share in this last chance saloon activity of the altnets at this point? Thank you.
Look, Ulrich, I don't see that we have market share losses. The opposite is what I'm seeing. I saw that by the way as well in fixed line broadband with vectoring, Supervectoring. We have gained market share from Vodafone in this turf as you can see from the strong growth around 6% this year. On top of that, you know, there are a lot of announcements, big numbers are flying around. Look, our thing is we have doubled the build-out ratio compared to last year. We will double again this year. We have the capacity, we have the tools, we have the people who are building it. Therefore we go our path.
We will have, let's say, more than 50% of the total fiber market in our plan, which is, you know, almost, you know, the retail market share which we are offering today. I don't see the risk of losing infrastructure share here in this regard. On top of that, we are open to collaborations with people who are building infrastructure. We have a wholesale strategy as well. I appreciate it if others are building infrastructure as well. The only thing what I'm asking for is reciprocity because they are using our infrastructure and we want to use their infrastructure. Therefore, I think, you know, I'm not so worried.
I even see that some of the commitments from the Alt-Nets and especially from the municipalities are, let's say, stepping back from their high commitments or at least from the execution because they see us moving forward in areas where we have strong market share. Therefore, take the IFM example and our commitments to four million households in areas where we have significant market share to lose, where we are now building own infrastructure. I'm not worried. I think we have never been as strong as we are on the fiber side.
I would say, yeah, we're losing some customers to overbuilders, but we're taking more share from cable.
Yeah.
We expect to continue to do so.
Okay, thank you. We will reach 12 million rural homes by the end of the decade on current plans. That's taking a lot of the market, hopefully. The next question we have is from Josh Mills at Exane, please.
Hi, guys. Thanks. I've got two questions. One is just going back to some of the German KPIs and I guess a very good revenue EBITDA performance overall. But if you look at the fiber net adds, both retail and wholesale, I think they're coming in, you know, a bit lower than previously. I'd just like to get your view on whether this is a kind of ongoing unwind of the pull forward in demand we saw during the pandemic, and what we should expect for the run rate going into 2022. The second question would just be to get an update on the carve-out of the tower businesses for Czech Republic and Slovakia, how that is being factored into guidance next year, both on the European segment but also through development segment. Thank you.
On the German KPIs, obviously, in line with the new wholesale models which we have constructed, especially you've probably read the news on 1&1. We're also getting into a discussion right now how we're moving not only the net adds up, but also the migration from the vectoring network into the fiber network, because ultimately we wanna see our wholesale customers sitting on the fiber network. That is definitely a discussion which is in early stages on how to do the copper to fiber migration. Therefore, I think that is too early to see the results. Do we expect a continuous degradation of wholesale net adds? No, I wouldn't.
I would basically assume that is on a similar level as we've seen in the second half of this year. You wanna take the-
Yeah. Look, on top of that, Christian, I would like to say, we have a really significant advantage on customer service. We constantly dominate all the service in this regard. We have a very loyal customer base who is now willing to go with us into the upselling. We are upgrading, as I mentioned, the 100-megabit, the 250 Supervectoring services. For me, I think the biggest issue is how can we accelerate the take up rates in the fiber to the home services because around 20% is a little bit low from a utilization perspective. I think this is a task which we should get focused on that one.
I think, you know, our customer base is very solid, very stable, and loyal, and the net promoter scores are very nice. Update on carve-out of tower business in Czech and Slovakia. Look, what we are doing is, we will carve out all the businesses and make them independent. The advantage which we have on our TowerCo today is we are not as the others in a very early stage of their business. Every time they are learning, they're carving it out, they have to build a governance. The processes are not professionalized. Now, what the big advantage of our telcos, of our TowerCo is that it's highly professionalized.
Now, this requires pre-work, and we're doing this in the Czech and the Slovakian. It's another upside potential for us to monetize passive infrastructure here. It's too early to say. It's not part of the focus of our tower activities at that point in time. Perspectively, yes, it is another option which we are preparing. Impact. We assume that the towers still remain in the MNOs. That is part of the guidance. If we have changes over the course of the year, obviously we'll let you know.
It takes about a year between deciding to carve out and actually getting it done, or potentially a few months, shorter or longer. Next question we have is from David Wright at Bank of America, please.
Thank you, Hannes. Look, I might just ask you to add a little bit of granularity if possible on your strategic thinking on the towers. You know, have you had any discussions on the way? Just remind us of the absolute priorities in terms of what you could choose to do with your towers business. Then if I might just add a second slightly separate question. Europe performed very strongly throughout the year. It was a good acceleration through the year, in particular. If I look to the 2022 guidance, stable revenues, slight increase EBITDA, does that feel a little cautious, a little prudent, or what are the headwinds, maybe some of the low-hanging fruit on costs have gone now?
If you can just talk through just perhaps if that looks a little bit, like I said, prudent. Thank you.
Look, first, David, thank you for the appreciation and I would urge every active investor to just look about the different stocks in the telco sector and compare the growth rates both on revenue and on EBITDA, on free cash flow, and benchmark it. You know, we are doing very well in this comparison, and we are constantly monitoring that. I think our aggressiveness, our activities, our acuity in the way how we are doing this is always, you know, being totally aware, awake about what's going out there, on there. With regard to the towers, let me stress one issue, and I do not know if you know that I'm not going into details of the ongoing negotiations which are taking place.
I think we couldn't have chosen a better window for our activities. You know, we have an up and running organization. We have unbelievable growth on building towers in the most attractive market in Germany last year. I mentioned the number 1,400, which is more than a thousand more than our next biggest player here in this environment. This is delivering an 8% overall revenue growth, and it's delivering a 13% external revenue year-on-year growth because others, everybody wants to use our towers for the 5G service and the like. We have a great upside potential as well for third-party opportunities. Only 25% of our towers are used today. The upside potential is very nice.
On top of that, we are again in the position of being a kingmaker. We do not have any time pressure or whatever. By the way, even if you don't want to make me pressure here, you know, I will not make bad deals. I never did that, and I'm patient like a cat. We will wait for the right thing and for the right optionalities. I will not exclude any kind of option at one point in time. Be it creating another alternative to Cellnex as a big operator, be it, let's say, having an industrial solution, or be it, let's say, maybe making one of the companies one of the biggest takeover players in the world.
Giving an opportunity for somebody who is coming from the outside and want to find his relevance in the most attractive market here. It's a growing market, highly valued. We are ready to de-consolidate, as I said. We want to monetize money for our debt reduction going forward and for our financial options we might see. Our business is very solid and very well-performing, and that's where we are. I can tell you a lot of activities are going on these days, but I am not sharing them with you right now. Let me continue with the question regarding the European Segment. I think first of all, we have to bear in mind that the European Segment was benefiting in 2021 from a very good roaming recovery, which supported the year-over-year growth between 2020 and 2021.
The second one is we're confident about the commercial trends in the European segment. We have no indication whatsoever that this is coming down. Especially when it comes to EBITDA, there's also, I would say, headwinds coming from inflation, especially when it comes to salaries which we're facing, especially in the European segment. This is why I would call this guidance, all up, realistic and not prudent.
Okay. The next question is, thanks Christian and Tim. The next question is from Georgios Ierodiaconou at Citi, please.
Yes. Good afternoon, and thank you for taking my questions. I have two. The first one is on towers, and just a bit, maybe a follow-up on the comments you made earlier around the growth trajectory. If you don't mind, it would be great if we get a bit of an update on where you are in build-to-suit in 2022, and obviously you are increasing your coverage. I'm guessing you don't have the same supply-side constraints as some of your competitors. Regarding 1&1, they are a lot more advanced in where they are with their network rollout versus the previous time you spoke to us in November. I was just curious to hear from you if it's somewhere where you see opportunities for third party growth.
My second question is on wholesale, and it's very specific, on the revenue trajectory as we pass the anniversary of the reset from the commitment model, in March, April next year. Just wanna get an understanding of what kind of output growth you could see. Are some of your customers upgrading to higher speeds? Just to get a bit of an idea of how much of a headwind versus tailwind we could get in next year. Thank you.
Georgios, first, let me say the first thing. We built 6,300 towers over the last four years in Germany, and nobody else is able to do this in this speed. That has to do with the regional organization, both from a construction perspective, but as well from a political organization. Because the reason why a lot of these towers not being able to be built in Germany is because of, let's say, political concern considerations. Our, let's say, strong local organization, political organization is helping here big time. On top of that, it's the credibility of Deutsche Telekom. You know, we have more credibility than other investors in this regard, and this made us the machine running.
Nevertheless, we were willing to build 2,000 towers on an annual basis over the last, over the next years. We are well behind our build out ambitions. If you ask me today what is our plan for 2022, another 2,000. I think it is a little bit unrealistic to get them all approved because of the federal system and about the concerns of citizens when it comes to the build out here. Nevertheless, we will again be the number one builder here in Germany. Every kind of new sites gives the opportunity for a growth on the third party businesses. This is part of the TowerCo already today. 25% is where we are.
I think we can easily go beyond 30% in this regard over the next years. We see further growth, even on a double-digit side, possible for these activities, in the operations. Is there CapEx needed for that? No. This is included in our CapEx envelope. All of this is foreseen. If we are not able to roll that out, we might have some excess CapEx here, at least in this field, to be considered.
When it comes to the wholesale question, George , I would say you see it already, the sequential improvement in our quarterly numbers on wholesale. In Q2, they were negative 5.6%. In Q4, they were negative 3.3%. When it comes to access revenues, in the Q2 , we had a drag in the wholesale business of -9%, and in theQ4 was only negative 6%. As the commitment model is rolling over, we're confident that we're gonna provide stable numbers for the wholesale business. The second point is, and I think you highlighted it already, is, obviously the upsell from ULL to VDSL or to vectoring. That is something which we're betting on.
As a subsequent step, as I said early on, we have to discuss with our wholesale partners how to drive fiber utilization and how they can help us on this one.
As we said last year, unit prices, wholesale prices for the bitstream products, VDSL bitstream products will grow by about 10% between 2020 and 2024. You have the mix effect on top that Christian has referred to. With that, we have the next question from Simon Coles at Barclays, please.
Hi, guys. Thanks for taking the questions. Sorry to go back to towers, but could you just remind us your view on sort of the various options you have? The pros and cons from using, say, a partnership with another listed TowerCo versus, say, merging with another mobile operator, given you've already been running your towers, I think, in Germany for over 20 years. You already have a more developed business. I'm not sure what merging with another mobile operator TowerCo might bring. The last option obviously is a strategic financial investor. It'll be great to hear latest thoughts on those three options. I know you've talked about it a lot in the past. Just on leverage, I think last year you'd said that leverage should peak in 2021.
I think now with the latest agreement with Crown Castle, it feels like leverage should peak in 2022. If you could just elaborate on that sort of bridge, that would be great. Maybe some clue on how leases should progress after the Crown Castle deal is factored in. We would assume that should come down given the decommissioning in the U.S. Thank you.
Okay.
Simon, long question, a very short answer. I wanna see money. I wanna see the highest value, full stop. You know, this depends on the deal, and therefore, we will take the most juiciest deal for us. We're not concerned about, you know, golden sites. We have MLAs in place. Everything has been defined. So this is all solved. We do not need control. We are flexible on the structure. I want to see the money.
Simon, first of all, congratulations to your memory. You're absolutely right. A year ago, I said net debt will peak in 2021, and we assumed that obviously the Crown Castle deal is being struck and being reflected in the numbers in 2021. Now, as we're having a slippage into Q1, I have to repeat myself, we're gonna see a peak in net debt in this year. But what I expect, to be honest, is that we see in the second half of this given year, and that depends on the timing of the white space auction in the U.S., a slight decline on absolute numbers in net debt. We don't expect another big tower deal to come. There's obviously always renewal business happening.
Bear with us into the second half, and then we should actually see either a complete stabilization or a slight decline on the net debt numbers. I think we also have to be prepared that we're gonna see three big impacts in the first half. One is obviously the $7 billion Crown Castle. The other one is spectrum from the previous auction, and the third one is the dividend payout, which will hopefully get approval from the annual shareholder meeting.
I'd like to spend one more sentence. When we made our statement, we were not aware that the C-band auction was accelerated that way. It came much earlier than we expected. I see that more positive because the C-band auction, you know, made one thing clear. Our strategic advantage with regard to spectrum and capacity is absolutely intact. I do not know what Dish is doing with that spectrum, but maybe they will roll it out. It is better to have that in their hands than it is in Verizon's hands. I was surprised that Verizon was not showing up on this auction. The advantage is that we have kept our advantage on the capacity side.
Now, this auction is now digested, or it will be digested now very soon. The good thing, if you look forward, there are no significant big things on the spectrum side which are obviously, you know, coming here for the upcoming of the next years. We still have this wide -band, the 110, but this is the last thing which we had planned. There's nothing big to come, and I think that's good for us because then we have a time to reduce our debts in the U.S., as we have foreseen. The acceleration came a little bit by surprise. We didn't know this. Nobody knew it. We digest it now, and then we go into the debt reduction.
Thank you, Tim. The next question is from Andrew Lee at Goldman Sachs, please.
Yes. Good afternoon, everyone. I had two questions. First question was just on the inflation that Christian mentioned earlier. Just wondered if you could talk about your confidence in passing through cost inflation to customers and what the timing or structure of that pass-through would be. And then secondly, just wanted to follow up on Josh's question and your comment, Tim, about the super big upselling potential and your ability to monetize your fiber digital infrastructure. You know, we know you've got the pricing freedom from the regulator now, but I guess what people are asking is, you have we got the customer demand? We've seen good evidence of customer demand through the work from home, you know, lockdown era of COVID.
What's giving you the confidence, as Josh asked, that this is just pull forward of demand, and that demand can continue to kick on? What are the data points or kind of evidence you're seeing that customers are gonna be willing to pay more for more? Thank you.
Okay, Andrew. On inflation, let us remind all together what are the cost impacts and then the potential to increase prices. So what we said is on energy cost, somewhere in between 75%-85% of the energy cost for this given year is being hedged. We have a longer term hedging in Germany. We don't have that to a large degree in Europe, so we have to see how it plays out. This has, from our perspective, absolutely no significant impact on our guidance. Second one is obviously salary agreements, which are ahead of us, and there's quite a bit of appetite. I think we have to go through the negotiations.
The third one was on raw material pricing or on procurement pricing, where there was a limited impact. This is the cost side, and I think we're especially in 2022 really confident that we can get control over these three impacts. On the price increase, I would say limited opportunity in Germany, given the premium pricing which we're already commanding. But there is opportunity in European markets, please respect that I cannot explain where exactly. That is obviously to Dominique and her leadership team. We will basically trying to take advantage out of the inflation by increasing prices in some markets.
What gives me confidence about customer demand and especially with regard to the upselling opportunities. The first thing is, you know, what gives me confidence is the evidence of 2021. We have upgraded a third of our customer base to higher speeds in areas where we can offer it. We have 70% to go. We see an uptake on 100 megabit, and we see uptake on Supervectoring as well. On top of that, we have 20% utilization on fiber to the home where we have built it. It is a clear focus of our activity to address the base and to offer them higher speed.
Now, the good thing is that we have a customer base that is getting more eligible towards a higher bandwidth, and we have seen that, and that is exactly what we are now serving. The good thing is that, you know, we are not at risk that, you know, Alt-Nets are really cannibalizing us in this area. Why? Because we have upgraded from 50, then to 100- 250. In some areas, you know, other operators are coming with 16 megabit and the like, and if fiber is available, then they have really a risk of churn. This is not the case. We do it step by step with our customers, offering higher speed.
The take-up rates, especially over the last two quarters, and you can go to the slide number 23, is very impressive. We went from 17.6%- 33% up, take rate, including a monetization of that. Our ARPU is going up. That is, for me, the best point, the proof point, for further potential in this regard. Our teams are incentivized to push this.
Okay. Let me maybe add one point on the pricing questions. Germany is not a market that has a lot of inflation indexing or so, but Germany does have significant promotions. There are operators offering six months for free, for instance, and those operators could reduce those promotions. That would be tantamount to a price increase. We can only encourage them not to sell their products too cheaply. With that, I think the next question I can't see right now. Okay, here is from Ottavio Adorisio at SocGen, please.
Hi, good afternoon. I have a question on my side. The first is a follow-up on tower. I apologize, but it's the topic of the moment. Is this for Tim? Tim, basically, you said clearly that your key priority is to maximize cash. I guess for cash you mean proceeds. So therefore, my question is, whenever a buyer of towers, an InfraCo or an industrial partner, look at towers, they don't just look at the infrastructure, they look at the contracts. So therefore, the question is, as part of the big picture, are you prepared to review the contracts you currently have between the OpCo and the TowerCo by increasing the rent? And also, if you can tell us how the contract currently structure, what's the length?
Most of your peers tend to have contracts with a lot of renewal, so therefore they can lower the capitalization of the lease. Normally, when you look at an investor partner, they're looking for much longer lengths, something like 15, 20 years. Are we prepared to basically give away such a length in the contract without options to renew at mid terms? Also, you said, and correct me if I didn't really get it right, that control is not a key issue. Now, I remember in past calls that control was critical, especially to some strategic towers. If you can elaborate if anything changed on that particular strategy, and if the case, how many towers control is critical? The second question is to Christian. It's much quicker.
It's basically to do with the free cash flow AL target you have for ex-US. In the CMD, you basically target for 2024 around EUR 4 billion. Now, I see on slide 49 that you repeat that EUR 4 billion, but the perimeter's changed. Of course, you sold T-Mobile Netherlands and the fixed line in Romania. Do we have to read that EUR 4 billion as that you reiterate the EUR 4 billion? And if not the case, what will be the target adjusted for this, the consolidation of these two business? Thank you.
Let me start with the free cash flow number. Obviously, you have to compare on a pro forma basis. Therefore you have to deduct the contribution from Netherlands and Romania. I think they're in the vicinity of EUR 300-400 million, right? Free cash flow. So this is the one piece which we have to factor in. The second piece is at the Capital Markets Day, where we announced that EUR 4 billion target. There was no increase in the CapEx foreseen. You know that we accelerate the rollout, especially in Germany in fiber. We said last year that we're gonna increase the CapEx envelope by half a billion euros. EUR 400 million are kicking in this year.
This is why the free cash flow number is moving from EUR 3.5 pro forma to EUR 3.7, and ultimately, we're targeting EUR 4. You know that, given what we've seen on the Capital Markets Day review, if there's potential to come to a higher number, we will take the opportunity.
Ottavio, trying to be very precise on your questions. The first one is the key priority is not cash. The position is value. Proceeds, cash proceeds is definitely something which we appreciate. Second, yes, we are willing to deconsolidate because we want to leave a business which has the possibility to leverage and to grow the business in a build-to-suit model without affecting our balance sheet fully consolidated negatively. Thirdly, we have for strategic golden sites, we have MLAs. Independent from the tenure of these contracts, these towers are not accessible. By the way, most of the interesting towers or the antenna places are on rooftops currently where we have limitations and this is less of the discussion here.
Thirdly, with regard to control, that doesn't mean, you know, that we do not wanna have a seat in it. We are not, you know. I don't see us being a full seller here. I see us always being part of this journey. If you have looked into how we struck the deal in the past, we always, you know, made the first step with a partner and then we were part of the upcoming value which was created at these entities. We call this the strategy of options, which we're always creating, and then we want to participate in this order. The last thing is the question about the passive infrastructure. I think on this area, we are not so focused on.
For us, it's more the coverage and the network which we are providing to our end customers, and therefore we want to monetize this. In principle, nothing has changed. I can tell you, everything has its value. Let's have a look to the alternatives which we are working on these days. Then we come back to you, and hopefully we have found a clever answer on the value accretion for Deutsche Telekom, because that's the main target. We don't want to do something stupid. We know we have to be forced to do something stupid. We really do it from a value enhancing for the group here. The development of the operating model of towers.
On the MLA question, Ottavio, this is not the first time that we're selling towers, right? Let me remind you that we have sold the Dutch portfolio to Cellnex, and obviously that comes also with an MLA, and we know absolutely that the value of that transaction is very much based on the predefined MLA.
Just to be 100% clear, the EUR 4 billion free cash flow guidance ex US for 2024 stands, right? We did EUR 3.9 billion last year, and we do EUR 3.7 billion this year after deconsolidating the Netherlands. Next we have a question from Stephen Malcolm at Redburn, please.
Yeah. Good afternoon, guys. I hope you can hear me okay. Thanks for taking the questions. Just a couple of questions on the guidance, if that's okay. Just coming back to Germany. I guess I'm just trying to understand the sort of basic moving parts in 2022 and 2023. I mean, your comments on inflation have helped that a bit. When I look at 2022, you're expecting a very slight increase, all of which appears to drop through to EBITDA. I guess the message is no real inflation this year, given what you've said with energy costs and everything else. Looking to 2023, you see a bigger increase but only a slight increase in EBITDA. Should we read that as essentially the retail business is unchanged through those two years?
That the wholesale business has, you know, a correction in 2022, then growth in 2023? You see no real inflation this year, but you're getting pent-up inflation in 2023 as those energy hedges roll off. I'm just trying to understand the sort of rhythm of that German guidance, please. Then just on the U.S., I'm kinda surprised you've guided to stable revenues there. I mean, Consensus, I think, has 2% growth. I take the point on leasing revenues, but given the guidance given by U.S. management on volume growth on ARPU, that would imply that handset revenues ex leasing are probably down a little bit next year. Sorry, this year. Maybe just help us understand why U.S. doesn't grow and Germany does grow in 2022. That'd be great. Thanks.
Okay. Let me try to answer the first question on the guidance 2022 and 2023. As I said, we're pretty confident that we have full control over the energy prices. Obviously, the big tariff agreement is still out there. I think what we've done in our prognosis, that we basically flagged a slight increase, obviously is supported by the EBITDA revenue momentum which we're seeing in the German business. What we haven't guided yet is what's gonna be the inflation impact in 2023, because I don't know, right? We know what's happening in this year. I can't give you full visibility in 2023. If you know somebody, please let me know.
We're 65% hedged in-
We're more than 80% hedged in 2022 and 75 in 2023. That only relates to the energy cost, that's true. The second one is also still intact. We expect increasing revenues in the wholesale business, and this is why we're also being a little bit more positive on the 2023 numbers with that guidance figure. All the other things which we said at the capital markets haven't changed. There's no assumption, including our operational reviews, which are deviating from what we have told you in May 2021. Go look it up.
Well, for T-Mobile's business, I mean, they have provided guidance for 2022, as you know. They have also provided guidance for 2023 in their Analyst Day last year, and they have confirmed those targets. You have a fairly comprehensive set of financial forecasts for T-Mobile, and I'm not aware that any of these have changed. Next we have James Ratzer at New Street, please.
Yes. Good afternoon. Thank you very much. Two questions, please. The first one, again, just sticking on the U.S. there. I think, you know, a number of your minority shareholders in the U.S. business would be quite keen to see you
The buyback this year, if possible, and Christian, you were talking about deleveraging already starting in the second half of the year. I mean, as the controlling shareholder, is that something you would be interested in approving this year, or do you feel you stick with the original plan that only starts next year? The second question I had, please, was just, you know, obviously you have a lot of discussions around towers, but maybe you could talk about your stake in British Telecom. What's your latest thinking on that stake? I mean, I notice that actually the value of that stake is the same value as Drahi's stake in Altice in the U.S.
Do you think you might even be interested in considering an asset swap, with him on that, you know, potentially as a route to getting some cable infrastructure in the U.S. as well? I'd just be interested to hear your options and latest thinking on the BT stake. Thank you.
Let me start with a quick reminder. Whenever the T-Mobile Netherlands deal is closed, and we expect this to happen in Q1, we said we wanna reinvest up to EUR 2.4 billion to acquire additional shares in the U.S., which would bring us to 84.4%. Now, on the share buybacks, look, I would say the following. First, there's an official statement coming from the investors' day in the U.S., which basically said up to $60 billion starting from 2023 towards 2025. The second one is there's a statement from Mike, who gave an indication that it may happen earlier. I think these things cannot be discussed in this kind of calls.
This has to be discussed within the T-Mobile US board, and therefore, I wanna see how the business is developing. Yes, I'm confident that we have at least stable net debt or slightly decreasing in the second half. Is that good enough for a share buyback? We're gonna see how the business evolves. I will not basically pre-run now on any kind of share buyback discussions in 2022. On the BT stake, I think we have to better understand what Drahi is doing with that stake. It sits in my pension fund. I expect roughly EUR 100 million dividend coming, flowing into the pension fund this year. I think this is all we can say so far to BT.
Look, I'm still struggling with this question about the T-Mobile US and the service revenue, because I think that was a statement and no question. For me, it was by far too negative. Look, guys, we have said that the revenue overall is stable because we are unwinding or, you know, changing the lease policy. We think from a customer perspective, it makes more sense to go into another model, and therefore, we wanna reduce the leases which were accounted in the revenues in the past. Therefore, this number is stable. The underlying service revenue, with all the growth we are having, can't avoid to grow. Therefore, we will see an increase and the revenue increase on the service revenue side. This is the juicy piece.
Please take that clear, yeah. There is no expectation that our service revenue is stable. It is gonna grow. The second question is, look, we are in discussion with the U.S. management, and yes, we can accelerate a share buyback already this year if we want to do this. This is a decision we have to take. We will see how the, you know, the year is developing with regards to the integration and with regards to the upcoming wideband auction and the like. Then we will decide that jointly with the U.S. team. That's nothing, you know, which we are discussing here. This is something which we then announce via the T-Mobile US board.
Thanks, Tim. With that, we take four more questions, and one is, the next one is from Usman Ghazi at Berenberg, please.
Hi, everyone. Thank you for the opportunity. I've got two questions, please. The first question was just on the DT Group dividend. Obviously, everything seems to be running along quite nicely. You've indicated that there's potential upside to synergies in the U.S. still in the bank. When you recommend the dividend, you know, sometime in Q2, I guess, you know, do you have confidence that the dividend can be at the higher end of the payout rather than at the mid-end of the 40%-60%, as has been the case for the last few years? That was the first question.
The second question was on the open letter that was written by the CEOs regarding the network traffic load that is being borne as a result of the OTT players. I just wanted to understand, I mean, how. I mean, is this a big CapEx risk for the sector, or is it that, you know, you are asking for just a fairer investment share to bear the traffic load? Thank you.
Usman Ghazi, let me start with the first question on the group dividend. Look, as we said at the Capital Markets Day, we have two vectors of dividend growth. One is obviously the growth in EPS, and as we have heavy investments in the U.S. so far, and aside from special factors, we only see a slight increase in 2022, but a significant one in 2023, as we also indicated at the Capital Markets Day. The other one is basically the payout ratio, 40%-60%. I wouldn't expect that we're gonna change that.
What we said, remember, in Q3 last year, we said we always will review, according to the business situation, what is gonna be our proposal to our board and to the shareholder meeting when it comes to dividend payout. I think it's way too early to discuss this right now. Expect more communication, as you always expected, in the Q3 call, but not earlier than that.
Usman, on the over-the-top discussion and the letter from the CEOs here. You know, we have always pushed for a better level playing field of our industries. This question about letting the over-the-tops help us to build out the infrastructure is part of a big story which we are driving with our local, but even, you know, with the European policymakers here. I give you an example. Since 2014, our traffic in the network increased by 13 times. At the same time, the ARPU went down by 30% in the Western world, something in this vicinity. It's very difficult for us to increase prices towards the end customers.
By the way, even politically, the willingness to let us, you know, increase the prices is even something easy. On top of that, we have seen that the digital market in Europe is not existing. It is a 27-player market here. Every membership has its own antitrust rules. The consolidation, intra-market consolidation, is as well something which is gonna be difficult. Apart from the retail prices and the consolidation, the only issue which we can do is to reduce the cost. Our industry is paying off more than 50% of their profits into CapEx, while in the U.S., it's only around 35%. The consequence out of that is that per capita, the U.S. is investing more into infrastructure and connectivity than European players are doing it.
Now, if we don't have the capability nor the power to build the infrastructure, this, it has a political dimension. Now, the question is, where can the money come from? Now, five players of the big over-the-tops in the U.S. create 50% of the traffic. Or if you take the big 11, they are creating 80% with their video streaming, gaming, social media platforms on our infrastructure. Now, the ask is now that we say, "By the way, if these guys are pushing content on our infrastructure for getting more data of the end customers," they're getting them for free, by the way, "then they should pay for the infrastructure they're using here." Simply as that. We have interconnection fees among the telco operators.
We have peering fees within our industry. Tell me one reason why over-the-tops should not reimburse parts of the use of our infrastructure, why they're not, you know, participating in this one. By the way, I would be willing to reinvest this money into fiber build-out and other infrastructure build-out. You know, this is something where our political leaders should care about. That doesn't mean I'm not respecting the big over-the-tops. The opposite is the case. I see their success. I see how they're driving their platform models. You know, this is a friendly ask that they should contribute in the connectivity which we are offering them, that they can provide even better service in the future. It's interesting, most of the politicians are listening to this one.
For us, it's an upside. There's nothing, you know, which we have in our plans with regard, but this is definitely an argument which we are using in the political discussion these days.
Okay. Thank you, Tim. Now we have a question from Polo Tang at UBS, please.
Yeah. Hi. Thanks for taking the questions. I have two questions. The first one is on spectrum. What are your latest thoughts on the allocation of the 800 MHz spectrum in Germany, and what do you see as the range of outcomes and impact on the market? My second question is really just about EU recovery funds. How much impact do you think this will have, specifically for the German market, and are you seeing any signs of funds being allocated, and released? Thanks.
Collect.
Let me try to answer the first question on the spectrum. Look, we're currently advocating to basically prolong the given licenses, and that is not only true for 800 MHz, but also for 1800 MHz, which is up for renewal, and 2.6 GHz as well, which is up for renewal in 2024, and which is following the auction from 2010. Ideally, you've heard the regulator to at least explore different options. It is unclear on if there's gonna be a prolongation, how the allocation will look like. I think that is subject probably, and that's speculation.
If someone wants to prolong the spectrum by a couple of years, I wouldn't be surprised if the regulator is coming back to us and said, "Okay, clear this and get to an agreement within the participating MNOs." That would include, obviously, 1&1. But look, if this is not playing out, we are ready for an auction in 2024. That is very clear. From this perspective, I think we can either go both ways. Obviously, from a financial impact point of view, the first one is the better relative to the latter, but that will require that we have kind of a consensus among the different operators on how to allocate the spectrum, especially what has been provided so far. I'm very optimistic on this auction.
I expect that the German government is not, you know, making it a full-blown auction with everything to maximize the proceeds here. The German policy makers and regulators never been front-runners, but they follow trends they're seeing in other European member states. We have seen in Spain the extension of spectrum. We have seen how fruitful the allocation of 5G spectrum was when the money was not given to the government upfront. You saw then a huge uptake of build-out. I just coming back from Greece and Prime Minister Mitsotakis, he was well allocating the 5G spectrum, and he sees now the benefit of infrastructure built in his country.
I think German policymakers are looking at it the same way these days. They will extend this auction without, let's say, proceeds expectations here. With regard to the European recovery fund, my read on the outlook the last time I looked at it was something in the vicinity of EUR 250 million what we have gained already in this regard. It's multiple projects. There's this IPCEI project on Gaia-X. There is a lot of, let's say, projects around the schools here in Germany. We have the funding for Open RAN. There is a cloud project, which is called Catena-X, which was funded, where we are participating.
In total, the recovery and the money which we are expecting there is EUR 1.2 trillion between 2021 and 2027. Member states submitted their national recovery and resilience plans to the EU. They are now in the approval phase. There is this stimulus package in Germany on top of that, which is very much going into digitization initiatives, strategies such as cloud, which I mentioned earlier. We are with an independent organization within our company applying to this one. You know that we had great success serving public in the past.
I'm very happy that we were able to announce yesterday, for instance, that the WHO has awarded us to provide the global exchange server for pandemic disease on for 195 countries, which we are building out of the systems. It's another, you know, very important societal project which Deutsche Telekom is allowed to drive.
Okay. The European Recovery Fund, of course, is also a big piece for our Greek colleagues and in some of our other European nations. In Germany, we already have significant public funds to drive digitization, especially the fiber.
At one point I'll show in one of the road shows or in one of the presentations, you know, in which kind of projects Deutsche Telekom is participating.
Yes.
Because it's anyhow public. I have no problem on releasing that.
Okay. Last question for today is from Adam Fox-Rumley at HSBC, please.
Thank you very much. I had a question on IoT. I think a short time ago you moved the business from T-Systems into Germany, and now I see that T-Mobile US has launched an international IoT offer. Firstly, I wonder if you are seeing that as the better route to a global market? And I guess by extension, are there other products or services that you think might be better approached from a T-Mobile US perspective rather than from a DT group one? Thank you.
Look, I'm just looking up because I was discussing that with my team the other day. We were a little bit late on this IoT, but now our organization has caught up significantly, and is doing very nice on that one. We have more than 45 million IoTs and machine-to-machine subs in Germany alone. This was more than 6 million on a year-over-year basis. We were growing. We have in Europe another, you know, increase of 4.5 million IoT devices. Revenue growth in this area was more than 10%.
The growth drivers for this area are the automotive and the logistics industries using our services. By the way, all the machine-to-machine subscriptions are shown under the business prepaid customer segment. That is where you find it. The growing net adds is the one thing, but we has as well the part of the equation is as well that the ARPU for these devices, you know, went down as well. It is getting cheaper for all these IoT devices. There is elasticity on the price here, which we faced as well. Now, we have extended our offer in two areas. The first area is we are now offering for the big global companies together with AWS.
Having this super 5G and having this countrywide LTE network, for the first time, you know, we can easily compete with AT&T and Verizon in this regard. AT&T is here more the global player. Maybe you have seen the announcement of Mercedes that they are now working with us on a global place in this regard. This was a big win here for us and there are more to come. This is the one thing.
The second thing is, we have as well wholesale partners we are working with, like AWS, and we are the only certified partner with our 1NCE, certified at Amazon in this one. The third one is we are now building this platform in a cloud native environment, which is another big differentiator, which makes it much easier for customers to register to the services than going via sales and a supply organization here. We want to automate this access to the services to a maximum way, prospectively even maybe over blockchain. But it's a little bit too early to say. We are investing technology-wise into this field. We see the growth coming. It will be an international offer.
We do that jointly with the TMUS. It's one of the big synergies projects we are having. I don't differentiate whether this is now coming from the U.S. or from Germany or whomever or from T-Systems. You know, we are serving the customer out of one hand in the group, and we are able to offer global services with our partner ecosystem. Is that answering your question, Adam?
Yes, it does. Thank you.
Good.
Excellent.
Have a look into this one. Exciting.
Very good. Thank you, Tim. I think you had wanted to close today's session with a couple of words.
Look, for us it's not an easy day because we were very proud about 2021 and how we delivered on the services. You know, driving with our year results into this Ukraine crisis. I think what I wanna leave with you is that I think Deutsche Telekom is positioned even in this geopolitical conflict in a very well way because we are serving the Western market. I think that our share price drop that was today very much driven by indices and a lot other things. I think fundamentally there is no reason to do this. We are very confident with regard to 2022 and where we are.
I do not wanna be seen as kind of overexcited, because, you know, this is a difficult environment, and I even want to give you the feeling of dignity and by the way, of stability. I think we can be the anchor for solid dividend payment for solid free cash flow growth enabling society for connectivity. This is the reason why I decided to stay in that company for another five years. The board asked me to extend my contract earlier than the expected 2023. I think that was a very clever move of my chairman to generate a super stability at Deutsche Telekom.
Because we will have a new chairman coming in in April, which is Frank Appel, the CEO of DHL. With me and my team here, we have now certainty as well. I think everything is very well maintained to face all the challenges which are around there. I hope that we will recover soon from today's results and deliver on another record year in 2022. Thank you very much, guys.
Yeah. Thank you.
Thank you, guys.
Thanks to the two of you. Conference now about to end. Should you still have any further questions, we kindly ask you to contact our investor relations department. Thanks again and all the best.